Everyone get ready. The slew of earnings reported last night look to send the market reeling. As well, companies do what they do when their earnings are light – they reduce guidance. This helps them look better the next time earnings season comes around, so for as much as the company stock drops this time it has the potential to rise next time. Friends, it is a stupid game, but, unfortunately, it is the only game, so we have to deal with it …
Looking ahead to potential opportunity, one should look to the wind industry. For all the political blather about “reducing our dependence on foreign oil,” it actually appears the wind industry is helping the US get to that goal.
- The U.S. wind industry in August for the first time surpassed 50,000 megawatts (MW) of generation capacity – enough to power 13 million homes, the American Wind Energy Association (AWEA).
It seems this is an opportunity to put your boat out on a rising tide. Yet, unlike the real tide, which is dependent on the consistency of the moon’s gravitational pull, the metaphorical tide of opportunity is dependent on the inconsistency of the US Congress.
- But the federal production tax credit for renewable energy is due to expire at the year-end. The AWEA said the credit, which has been continuously in place since 2005, helps create more than $15 billion a year in investment in U.S. wind farms.
So, there it is. If the US Congress continues the tax credit for wind energy in the lame-duck session after the election, the boom will continue and the investment opportunity will remain. If the US Congress continues its dysfunctional ways, well, then …
- Big U.S. banks are hiring mortgage bankers to meet a surge in demand for home loans and refinancings, but they are still struggling to process application.
Analysts and the breathless media find plenty to fault in the news above (the wave is only temporary … banks are afraid to hire … it takes months for a mortgage to be approved … could undermine the Federal Reserve’s attempts to stimulate the economy … mortgage rates have fallen more slowly and by less than they would have done in more normal times …). I could go on. Instead, I say look for opportunity to make money on the current wave of mortgage activity.
- Capacity constraints work in the banks’ favor. Profit margins for home lending are more than double their usual level.
Despite the naysayers and the perma bears, facts are facts, and if reality beats out perception here, the surge in mortgage requests will continue, bank profits will continue, and the economy will improve on two counts – more good-paying jobs with banks and continued positive activity in the real estate and housing industries.
- Chase has increased its number of loan officers by 23 percent over the last year, and expects to keep hiring aggressively, said Kevin Watters, head of mortgage originations at JP Morgan Chase.
See what I am saying?
Trade in the day; Invest in your life …
